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Taking a page from my own book

There's a new book available from Amazon and other vendors both in Kindle and hardback form. It's titled "Roadmap to Retirement Security: How to Build and Conserve Retirement Wealth" by Stephen J. Butler. A promotional blurb on the front cover says, "Considering its subject matter, I found your book to be surprisingly pleasant to read."

Basic financial knowhow can be gleaned from entertaining books that read like novels. George J.W. Goodman, who died last month, was one of the best of these writers who could make financial topics come to life in engaging, entertaining ways. I consider his books, "The Money Game" and "Supermoney'' written back in 1968 and '72, respectively, to be some of the best. He wrote under the pseudonym, "Adam Smith" in honor of the British economist who wrote "The Wealth of Nations" back in 1776.

As an example of Goodman's gift for enlightenment and entertainment, I recall him describing what "going public" was all about in simple terms: A psychiatrist in New York grosses $400,000 per year (back in the '60s) and nets $100,000 after his expenses of phones, rent, secretary, and his own salary (without the year-end bonus). He decides to go public and sell his practice with its $100,000 annual profit. The price/earnings multiple for public companies at the time is about 20. This was during the so-called "go-go" period in the late '60's stock market -- named after the white go-go boots "made for walkin'" of Nancy Sinatra fame. But I digress.

Anyway, the psychiatrist takes his company public and walks away with $2 million (20 times the annual $100,000 profit). The point of the anecdote is to illustrate the effervescent nature of the financial markets, but when I read it, it was easier to make sense of what was going on at the time. A little satire can generate some valuable circumspection when an entire industry is lining up to get us all worked up over the next IPO. Not long after that book was published, the so-called "nifty-fifty" companies watched their stocks plummet by 80 to 90 percent.

Another favorite of mine is, "The Armchair Economist: Economics and Everyday Life" by Steven E. Landsburg. His simple discourse on the money supply helped me understand what the Bitcoin phenomenon is all about as it relates to the money supply in general. In the course of further debunking and explaining much of what we hear that passes for financial news, Landsburg describes Bob Brinker as "an inexhaustible source of unexamined platitudes." You get the picture.

Michael Lewis, of course, with his first book, "Liar's Poker," should have given everyone a clue as to how tenuous the bond industry could be as it operated with little adult supervision. If memory serves me right, I like the part where some young bond trader throws his multimillion-dollar, year-end bonus check on the floor and jumps up and down on it in front of his boss to emphasize that he thinks it's inadequate. If more legislators had read that book, we might not have agreed to offer taxpayer guarantees to an industry that, in 2004, was allowed to be leveraged 30 to 1 -- and therefore backed by our guarantee that they we wouldn't let them fail even if they had as little as a 3 percent loss.

Further favorites of mine include Ken Fisher's "Debunkery ... Seeing through Wall Street's Money Killing Myths," Fred Schwed's "Where are the Customers' Yachts," John Spooner's "Do You Want to Make Money or Would You Rather Fool Around?" Anything written about Warren Buffett or John Bogle (Vanguard Group founder) makes for entertaining reading because they are both contrarians who consistently buck conventional thinking. When, for example, have you ever heard a financial talking head suggest that no stock should be purchased unless you planned to keep it for at least 10 years (Buffett) or that index funds consistently beat actively managed money (Bogle).

My book is an attempt to condense, within a hundred pages, the basics that have been explained in these weekly columns over the past 15 years. If you've missed any, you'll find what you missed conveniently located in this quick (pleasant) read.

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